How to choose a home insurance deductible and how it works

How to choose a homeowners insurance deductible

The best deductible for homeowners insurance often depends on your financial situation. To choose a deductible, consider a few factors:

How much can you afford to pay annually, or monthly, for your homeowners insurance? A higher deductible reduces your premiums, so if you prefer to pay less upfront, choose a higher deductible.
How much can you afford to pay if you file a claim? You will have to pay the deductible amount if you file a claim, so be certain you can afford the one you select. If you choose a higher deductible, consider putting the money you save in a savings account to use if you need to pay it.
How likely are you to file a claim in the next few years? If you need to save up to cover the deductible, consider the risks in your area and how likely you are to file a claim before you can set the savings aside. Is your area prone to hurricanes? Hailstorms? And, of course, consider the reality that something can go wrong at any time.
Can you pay for smaller repairs out of pocket? Having a high deductible means you can’t submit a claim for any damage under that amount. So, if you have a $2,500 deductible, you need to be prepared to pay for any damage under that amount yourself.

Remember, you can change your deductible at any time if your financial situation changes. Select the one that makes the most sense for you right now and change it if necessary.

You should consider a higher deductible if:	You should consider a lower deductible if:
You prefer to pay lower premiums upfront	You don’t have the savings to pay a larger deductible if you need to file a claim
You can afford to pay a larger deductible if you need to file a claim	You live in an area at a high risk of severe weather or other risk of loss
You can handle paying for minor repairs to your home or to replace personal property	You’d rather pay more in premiums to know that you’ll pay less out of pocket if you file a claim

How does your deductible affect your homeowners insurance rates?

Depending on your insurance company and coverage, increasing your deductible can reduce your payments by between 20% and 40%.

An Insurance.com rate analysis of how much you can save in every state by hiking your homeowners deductible shows homeowners can trim an average of $512 off their premium by increasing a $500 deductible to $2,500.

Florida homeowners, who pay the highest home insurance premiums nationwide, save the most by increasing their deductibles from $500 to $2,500. They can save an average of $3,813 each year. The smallest savings are in Hawaii, at only $19.

Below, you can see the average cost of a home insurance policy in your state at various deductibles. Rates are based on a policy with $300,000 in dwelling coverage and liability.

State	$500	$2,000	$2,500	$3,000	$4,000	$5,000
Alabama	$4,094	$3,534	$3,501	$3,433	$3,172	$3,152
Alaska	$1,646	$1,417	$1,381	$1,330	$1,248	$1,214
Arizona	$2,983	$2,445	$2,418	$2,314	$2,041	$2,056
Arkansas	$4,082	$3,582	$3,537	$3,521	$3,239	$3,193
California	$1,861	$1,547	$1,519	$1,473	$1,315	$1,316
Colorado	$6,307	$5,292	$5,229	$4,994	$3,800	$3,777
Connecticut	$2,245	$1,974	$1,962	$1,929	$1,795	$1,791
Delaware	$1,835	$1,434	$1,434	$1,402	$1,322	$1,297
Florida	$10,366	$6,571	$6,553	$6,553	$6,358	$6,344
Georgia	$2,557	$2,263	$2,256	$2,172	$1,996	$1,980
Hawaii	$1,584	$1,581	$1,565	$1,577	$1,526	$1,522
Idaho	$2,708	$2,146	$2,125	$2,017	$1,741	$1,736
Illinois	$3,470	$3,032	$3,019	$2,965	$2,679	$2,671
Indiana	$3,156	$2,786	$2,751	$2,671	$2,421	$2,406
Iowa	$3,971	$3,273	$3,224	$3,155	$2,892	$2,845
Kansas	$6,911	$5,986	$5,918	$5,818	$5,540	$5,447
Kentucky	$4,434	$4,423	$4,313	$4,304	$3,695	$3,675
Louisiana	$7,919	$7,337	$7,261	$7,227	$7,050	$6,685
Maine	$1,601	$1,378	$1,373	$1,368	$1,267	$1,268
Maryland	$2,996	$2,580	$2,531	$2,491	$2,260	$2,244
Massachusetts	$2,780	$2,365	$2,328	$2,306	$2,029	$2,023
Michigan	$3,269	$3,772	$3,586	$3,655	$3,278	$3,306
Minnesota	$3,875	$3,384	$3,292	$3,220	$2,821	$2,807
Mississippi	$2,708	$2,468	$2,449	$2,358	$2,282	$2,272
Missouri	$4,880	$3,591	$3,534	$3,487	$3,979	$3,951
Montana	$3,848	$3,434	$3,400	$3,317	$3,040	$2,860
Nebraska	$7,714	$7,149	$7,064	$6,946	$6,221	$6,117
Nevada	$2,055	$1,709	$1,687	$1,640	$1,498	$1,452
New Hampshire	$1,383	$1,214	$1,231	$1,189	$1,082	$1,082
New Jersey	$1,643	$1,339	$1,325	$1,305	$1,228	$1,220
New Mexico	$5,843	$4,365	$4,299	$4,276	$3,897	$3,853
New York	$2,277	$1,954	$1,949	$1,921	$1,795	$1,774
North Carolina	$3,839	$2,998	$2,814	$2,704	$2,523	$2,340
North Dakota	$3,906	$3,447	$3,282	$3,227	$2,976	$2,961
Ohio	$2,310	$2,021	$1,980	$1,927	$1,760	$1,737
Oklahoma	$6,361	$5,282	$5,193	$5,124	$4,519	$4,493
Oregon	$1,776	$1,547	$1,537	$1,471	$1,392	$1,386
Pennsylvania	$1,657	$1,468	$1,448	$1,412	$1,291	$1,256
Rhode Island	$2,479	$2,115	$2,109	$2,093	$1,882	$1,866
South Carolina	$3,614	$3,293	$3,247	$3,225	$3,011	$2,972
South Dakota	$4,137	$3,657	$3,617	$3,647	$3,351	$3,280
Tennessee	$3,681	$2,948	$2,874	$2,784	$2,545	$2,486
Texas	$5,320	$5,061	$5,006	$4,957	$4,725	$4,641
Utah	$2,005	$1,706	$1,697	$1,657	$1,464	$1,455
Vermont	$1,071	$888	$869	$861	$832	$824
Virginia	$2,497	$2,293	$2,283	$2,265	$2,157	$2,150
Washington	$1,809	$1,510	$1,496	$1,412	$1,272	$1,260
Washington, D.C.	$1,759	$1,384	$1,368	$1,329	$1,226	$1,202
West Virginia	$2,128	$1,859	$1,832	$1,752	$1,627	$1,615
Wisconsin	$1,992	$1,751	$1,736	$1,693	$1,527	$1,513
Wyoming	$2,236	$1,857	$1,857	$1,764	$1,607	$1,587

When using our average home insurance rate by ZIP code tool, you can choose among six deductible amounts to see how premiums compare based on deductible, dwelling, and liability amounts.

How does deductible affect rates by company?

Allstate has the widest range of premiums by deductible, with a $1,499 difference between a $500 and a $2,500 deductible.

The company you choose matters since each company has its own rate formula. Not all companies offer the same deductible options, and options vary by state, but we averaged our company data across all states to provide estimates in the table below.

Company	$500	$2,000	$2,500	$3,000	$4,000	$5,000
State Farm	$2,943	$2,515	$2,452	$2,402	$2,293	$2,402
Farmers Insurance	$4,569	$3,905	$3,891	$3,863	$3,424	$3,371
Allstate	$3,681	$2,386	$2,361	$2,321	$2,184	$2,182
USAA	$2,353	$1,925	$1,920	$1,816	$1,589	$1,584
Nationwide	$3,497	$3,165	$3,144	$3,122	$2,820	$2,804
American Family	$4,227	$4,016	$3,966	$3,943	$3,752	$3,752
Travelers	$3,374	$3,067	$2,980	$2,968	$2,645	$2,627
Progressive	$6,851	$6,265	$6,174	$6,086	$5,495	$5,495

What is the standard deductible for homeowners insurance?

There is no standard deductible, but a common homeowners insurance deductible is $500.

“Not all that long ago, a $100 deductible was the standard deductible amount, but in keeping with inflation, the standard moved to $250. As property claims started to escalate and new coverages were developed, it wasn’t long until $500 became the new standard,” said P.J. Miller, insurance agent, Wallace & Turner Insurance in Springfield, Ohio.

Miller added that many insurance companies also offer a disappearing deductible benefit, which reduces your deductible over time if you don't file a claim. So, your $500 deductible may shrink to $100 if you don't file a claim for three years.

Miller said some insurers have also attached higher deductibles to roof claims. Insurance companies usually want homeowners to replace their roof after 20 or 30 years.

What’s the right home insurance deductible for you?

The homeowners insurance deductible that’s right for you depends on your financial situation.

“Go with the highest deductible you’re comfortable with, whether that’s psychologically or monetarily,” Miller says. “And don’t think about it on a one-year basis, as that tends to skew the thinking because you want to reduce your homeowners premium as much as possible over the course of your homeownership. A substantial deductible like $1,000 or $2,500 might save you $100 or even $200 to $300 or more on an annual basis, and after five years, you’ve put a dent in that homeowners premium.”

Here are some scenarios to help you figure out which deductible to choose:

You have a lot of savings. If you have a savings account that can more than handle a higher deductible, there's no reason not to keep those insurance premiums in your pocket.
You have little to no savings. If your savings account would be decimated by a financial emergency, you are probably better off with a lower deductible.
You're financially stable, but that could change soon. If you're doing well financially but there are changes in the near future that will affect that, such as the end of child support payments or retirement, consider a lower deductible. You don't want to forget to change it and realize too late that you can't afford it anymore.

How to get lower rates without a high deductible

The only way you can be sure you're getting the best deal is to shop around for competitive quotes every time you renew or amend your policy. Check out the best homeowners insurance companies. Know what homeowners insurance discounts to ask about and be aware of the key factors that affect homeowners insurance rates. Also, get quotes for multiple deductible levels to see which option is best for you.

FAQ: Home insurance deductibles

Is a $2,500 deductible good for home insurance?

Yes, if you can afford it. A $2,500 deductible is on the upper end of deductible amounts for most standard homeowners insurance policies, which means you'll pay a lot less in premiums.

Am I required to pay my homeowners insurance deductible?

Yes. If you file a claim for home repairs, the insurance company will reduce your settlement by the deductible amount. You will have to pay that amount directly to the contractor. If you do not pay the contractor for the work they performed, they can sue you and place a lien on the property. Also, the insurance company won't cover the remaining repair costs unless you pay your deductible first.